Wall Street's nearly flat close Tuesday provided little direction for investors in the region, leaving them looking for local cues.

"The market is pretty well as you'd expect, with nothing much coming in from overseas," said Andrew Sekely, director of equities at Intersuisse in Sydney. "We've got a pretty quiet opening and there are no real trends to trade today," he said.

Japan's Nikkei 225 was up 0.1%, South Korea's Kospi Composite was up 0.5% while Australia's S&P/ASX 200 and New Zealand's NZX-50 were flat. Dow Jones Industrial Average futures were 10 points lower in screen trade.

Qantas Airways was the highlight of the Sydney market, after it said its discount carrier JetStar formed an alliance with Malaysian counterpart AirAsia aimed at cutting costs, pooling their expertise and reducing air fares.

The tie-up was a positive development for both carriers, and showed both management teams were "thinking outside the box" to ensure they remained leaders in the region, said IG Markets analyst Ben Potter. "In an extremely competitive environment where airlines have been under constant pressures from a number of different forces, this world-first alliance is very positive indeed," Potter said in an e-mail. Qantas shares were up 1.7%.

Mining stocks were boosted by stronger metals prices recently with BHP Billiton up 0.6% and Rio Tinto up 1.1%. "I think the market is looking ahead with some confidence. We've got one of the best economies in the world and with resources prices going up, that is a plus for the economy," Sekely from Intersuisse said.

In Japan, Nintendo surged 4.5% after it said sales of its popular Wii game console rebounded in December and would likely exceed three million units.

Losses in some exporters due to the stronger yen was offsetting gains in the insurance sector, after Bank Of America-Merrill Lynch's bullish coverage initiation of several insurance companies. Panasonic was down 0.8% and Nissan Motor lost 1.4%. Mitsui Sumitomo Insurance Group was up 1.3% and Aioi Insurance added 1.5%.

Korean exporters were leading the Seoul market higher. "Foreigners are extending their buying spree despite the recent sharp appreciation of the Korean won against the U.S. dollar. I think they seem to be treating the won's recent strong trend as a positive sign for the recovery of the local economy rather than as a negative" as it could hurt exporters' price competitiveness, said Bae Sung-young at Hyundai Securities. Hynix Semiconductor was up 1.7%, Samsung Electronics was up 1.1%, while Hyundai Motor gained 1.8% and Kia Motors added 1.5%.

In New Zealand, Pumpkin Patch was down 2.0% in wake of The Warehouse's report Tuesday of flat sales over the Christmas holidays while bellwether Telecom continued to underpin market with a 0.4% rise.

In foreign exchange markets, the major currencies were trading in tight ranges. In Tokyo, investors were looking to developments surrounding Japanese Finance Minister Hirohisa Fujii, after local media reported Tuesday that he wants to step down due to ill health.

Masafumi Yamamoto, chief foreign exchange strategist at Barclays Bank, said the yen may weaken if Fujii goes. "The possibility is low that it would be someone more tolerant of yen strength than Finance Minister Fujii, who had a strongly tolerant stance toward yen strength."

He added that a power vacuum could be left if Fujii departs, bolstering the position of Ministry of Finance bureaucrats who are less adverse to intervening in foreign exchange markets to curb the yen's strength.

The U.S. dollar was at Y91.65 from Y91.72 in late New York trade Tuesday while the euro was at $1.4352 from $1.4358 and Y131.53 from Y131.74.

The lead March Japanese government bond futures contract was off 0.02 at 139.24 points on investors' caution before an auction of JGBs later in the day. The 10-year cash JGB yield was up 0.5 basis point at 1.330%. Japan's Ministry of Finance was slated to auction Y2.2 trillion worth of 10-year notes later in day.

Spot gold was at $1,118.35 per troy ounce, up $1.15 from the New York close. February Nymex crude oil futures were down 13 cents at $81.64 per barrel.

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